The bond purchases are "providing important support to the recovery while keeping inflation close to" the Fed's 2% goal, he told the Senate Banking Committee in his semi-annual report to Congress. The hearing turned testy at times as Republican members criticized the bond-buying program.

Bernanke did outline in greater detail than he had previously the risks of the Fed's monthly purchases of $85 billion in Treasury bonds and mortgage-backed securities - which are aimed at holding down long-term interest rates.

For example, he said the program could stoke eventual inflation or spur excessive risk-taking by investors who sell low-yielding bonds and seek higher returns in stocks or commodities. That could lead to asset bubbles that ultimately burst.

But he said inflation is "currently subdued" and he doesn't see the costs of risk-taking "as outweighing the benefits of promoting a stronger economic recovery and more-rapid job creation."

Bernanke added that "the risk of not doing anything is severe as well" because that would slow economic growth. "We're trying to balance these as best we can."

Still, in a sharp exchange, Sen. Bob Corker, R-Tenn, said the Fed has stimulated "a global currency war" as other countries lower their interest rates to keep pace with the Fed. Lower rates generally decrease the value of a nation's currency, making its exports less expensive.

"We're not engaged in a currency war," Bernanke shot back.

Corker also accused Bernanke of setting policies that throw "seniors under the bus" by effectively keeping interest rates on savings low.

"I think one concern we have is about the effect of long-term unemployment," Bernanke said, noting that those out of work at least six months "may never be a productive part of our work force."

The exchange turned a bit more personal when Corker accused Bernanke of being too far willing to risk inflation to promote job growth, or being a "dove," in Fed parlance.

"So I think that, you know, I don't think there's any question that you would be the biggest dove, if you will, since World War II," Corker said. "I think it's something you're rather proud of."

Bernanke was ready with a retort: "You called me a dove. Well, maybe in some respects I am, but on the other hand, my inflation record is the best of any Federal Reserve Chairman in the post-war period, or at least one of the best, about 2% average inflation."

Worries that the Fed might soon end or reduce its bond-buying arose last week after minutes of the Fed's Jan. 29-30 meeting were released. According to the minutes, "a number" of Fed officials said risks such as inflation could prompt the Fed to "taper or end" the purchases before the job outlook gets substantially better, seemingly undercutting a roadmap the Fed has been emphasizing for months.

Stocks fell sharply last week after the minutes came out.

Barclays Capital said Bernanke's testimony "gave no signal that the asset purchase program is likely to be slowed or stopped soon." Sixty percent of economists recently surveyed by USA TODAY expect the program to continue into next year.

Bernanke also urged Congress and the White House to temper the $85 billion in automatic spending cuts slated to take effect March 1. He said such large cuts would put a "significant" near-term burden on the economy. Instead, he said Washington should devise a plan to address the nation's massive deficit by cutting the budget in a few years when the economy is stronger.

"Such an approach could lessen the near-term fiscal headwinds facing the recovery while more effectively addressing the longer-term imbalances in the federal budget, "he said.

Massive budget cuts, he added, would slow the recovery, hurting efforts to reduce the deficit as the government receives less tax income.

Noting that lawmakers recently have made progress in reducing part of the nation's debt, he said the current plan "doesn't quite match" the problem. Congress should not be "doing tough policies today when the real problem is a longer-term problem."

On the economy, Bernanke said activity "continued to expand at a moderate if somewhat uneven pace." He said the economy's contraction in the fourth-quarter was due to temporary factors, such as the weather, but business and consumer demand kept growing.

Some committee members, both Democratic and Republican, expressed frustration with the slow pace of the Fed's implementation of the Dodd-Frank act's tougher rules for regulating the financial industry.

Bernanke said the rules are moving forward but take time to develop.

Newly-elected Sen. Elizabeth Warren, D-Mass., said a recent study by the International Monetary Fund concluded large banks are benefiting from lower borrowing costs than smaller banks because financial markets expect the government will bail out the giants if they get in trouble. They have an advantage, Warren said, because creditors assume they are "too big to fail."

Warren was instrumental in the launch of the new Consumer Financial Protection Bureau, which was created by the Dodd-Frank Act.

In the hearing, Warren went on to cite a recent Bloomberg News commentary, drawing on the IMF study, asserting that large banks have been able to save $83 billion in borrowing costs because of the government's implicit protection - money that Warren said should be returned to taxpayers.

But Bernanke said such market expectations "are incorrect" and that the Dodd-Frank rules in the works would allow regulators to close large, troubled institutions without damaging the economy.

"We have orderly liquidation authority," he said.

Bernanke is scheduled to testify Wednesday before the House of Representatives Financial Services Committee.